A licensee in BC discovers that their client may be using a real estate purchase to launder proceeds of crime. Under both RESA and FINTRAC obligations, what must the licensee do?

Q: What is the correct answer to: A licensee in BC discovers that their client may be using a real estate purchase to launder proceeds of crime. Under both RESA and FINTRAC obligations, what must the licensee do?

The correct answer is File a Suspicious Transaction Report (STR) with FINTRAC, avoid tipping off the client about the report, and consult with their managing broker about appropriate next steps including potential withdrawal from the transaction. Option B is correct because when a licensee has reasonable grounds to suspect money laundering, they must: (1) file a Suspicious Transaction Report (STR) with FINTRAC as soon as practicable; (2) not tip off the client about the report (tipping off is a criminal offence under PCMLTFA); and (3) consult with their managing broker about compliance obligations and appropriate next steps, which may include withdrawal from the transaction. This balanced approach fulfills reporting obligations while protecting the investigation.

Q: What background knowledge is needed for this Regulatory Compliance question?

Suspicious Transaction Reports must be filed when a licensee has reasonable grounds to suspect that a transaction is related to money laundering or terrorist financing. Indicators include: unusual cash payments, reluctance to provide identification, use of multiple parties without clear rationale, purchase prices that do not reflect market value, and clients with unclear sources of funds. The STR must be filed within 30 days (or 'as soon as practicable'). Tipping off — informing the client that a report has been filed — is a criminal offence carrying up to 2 years imprisonment. The licensee should consult their managing broker and may need legal advice.

Q: What is a good way to remember the answer to this Regulatory Compliance question?

Remember 'STR + No Tip-Off + MB Consult' — file the Suspicious Transaction Report, do NOT tip off the client, and consult with the Managing Broker. When the exam asks about suspected money laundering, recall 'STR + No Tip-Off + MB Consult' — this three-step response covers all obligations: report, protect the investigation, seek guidance.

Q: What exam tip applies to this Regulatory Compliance question?

The tipping-off prohibition is a critical detail — it is a criminal offence. This eliminates answers involving direct police contact (which may tip off) or refusing to act (which signals suspicion). File the STR first, then consult your managing broker.

Q: How does this Regulatory Compliance concept apply in real world practice?

A licensee in Vancouver notices a buyer client wants to purchase a $2.5 million property using funds from multiple foreign accounts, is reluctant to provide identification for the beneficial owners, and insists on an unusually quick closing. The licensee files an STR with FINTRAC describing the suspicious indicators, continues normal communication with the client (to avoid tipping off), and immediately consults with the managing broker about whether to continue the engagement.

Question

Regulatory ComplianceBCHARD

A licensee in BC discovers that their client may be using a real estate purchase to launder proceeds of crime. Under both RESA and FINTRAC obligations, what must the licensee do?

Answer Options

A

Complete the transaction and file a report afterward

B

File a Suspicious Transaction Report (STR) with FINTRAC, avoid tipping off the client about the report, and consult with their managing broker about appropriate next steps including potential withdrawal from the transaction

C

Immediately contact the local police and refuse to act for the client

D

Do nothing, as money laundering detection is solely a law enforcement responsibility